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11 Jul 2013 10:07:33

Climate Change Levy Agreements UK

Envantage offer a wide range of services from full negotiation and management, audit support, energy abatement and risk management services.

Climate Change Levy Agreements (CCLA) provide a valuable discount for eligible energy intensive and IPPC regulated industries. This large financial discount is exchanged in return for an agreement to meet energy reduction targets and several qualitative energy and carbon management criteria.

The new scheme, due to commence in 2013, will allow CCLA participants to claim increased discount levels of up to 90% for electricity and 65% for gas. If you are eligible for this agreement, you cannot afford to miss this opportunity to claim your energy discounts and you should take action now.

We have a range of experienced consultants with demonstrated knowledge in successfully establishing and managing these complex agreements over a range of industries. We will ensure your agreement is set up correctly and is effectively managed. This is of paramount importance to protect compliance in the event of a DECC audit.

Climate Change Agreements (CCAs) allow eligible energy-intensive businesses to receive up to a 65% discount from the Climate Change Levy (CCL) in return for meeting energy efficiency or carbon-saving targets. The discount for electricity will increase to 90% from April 2013.

Climate Change Agreements (CCAs) are part of a package of government measures aimed at encouraging UK business to save energy and reduce carbon dioxide emissions. They set the terms under which eligible energy-intensive industries can claim a 65% discount on the Climate Change Levy (CCL), provided they meet targets for improving their energy efficiency or reducing their carbon emissions.

CCAs have a 2-tier structure:

Sector-level agreements between DECC and the sector or trade association (known as umbrella agreements) – these set out sector targets, the sector and DECC’s obligations, and the procedures for administering the agreements.
Individual agreements between DECC and the facility operator (known as underlying agreements) – these set out the targets the facility needs to meet, the operator and DECC’s obligations, and the procedures for administering the agreements.
CCAs allow eligible energy-intensive businesses to receive up to a 65% discount from the CCL in return for meeting energy efficiency or carbon-saving targets.

Energy-Intensive Industries: Definitions

Energy-intensive industries were defined initially as industries covered by Part A1 or A2, in Part 1 of Schedule 1 of the Pollution Prevention and Control (England and Wales) Regulations 2000 (as amended). This definition applies throughout the UK.

In 2006, the qualifying criteria for sectors that could apply for a CCA was extended and the definition of ‘energy intensity’ expanded to include the one set out in the Energy Products Directive (which came into force on 1 January 2004). The extended criteria are as follows:

energy intensity (EI) must be 3% or more (ie energy costs must be 3% or more of the production value for the sector)
the industry import penetration ratio must be 50% or more – this ratio is calculated for the sector as a whole to determine its exposure to international competition (the import penetration ratio is the total value of sector imports, divided by the total value of UK sector sales, plus the total sales value of imports, minus the total value of sector exports)
Sectors that do not meet the international competitiveness criteria must have an EI of 10% or more.

The eligibility test is based on the average energy cost and production values for 3 consecutive years. It is only applied at sector level and only at the beginning of the agreement so as not to disincentivise energy efficiency.

Sectors that have negotiated EI agreements include industrial gases, cold storage and glass manipulators.

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